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Deal on review would require IMF consent

The chances of the government reaching an agreement with the country’s creditors by Monday’s Eurogroup meeting are slim, because a number of issues remain unresolved between Athens and the eurozone and, according to a senior eurozone official, a staff-level agreement would require the consent of the International Monetary Fund.

The same official noted that major progress had been made in talks with Athens, saying they are taking place in a very positive climate, but “we are not yet in agreement as a series of issues remain open.”

However, the main problem is the impasse regarding the IMF’s participation in the Greek program, which is necessary for the second bailout review to be completed. “It is logical that the IMF is needed for the staff-level agreement, as everyone has to be on the same page,” the eurozone official explained.

The debt sustainability analysis, which the IMF mission needs to take to the Fund’s executive board for it to decide whether it will participate in the Greek program, will be completed after the end of the review, as it will have to incorporate a series of forecasts such as those on macroeconomics and growth. IMF Managing Director Christine Lagarde will not take part in Monday’s Eurogroup.

Asked if there could be an extraordinary Eurogroup meeting if there is no deal on Monday, the same official noted that such a meeting has not yet been scheduled, while adding that the eurozone is always flexible.

Meanwhile, Athens announced on Wednesday a breakdown in talks with Azeri state company Socar regarding the sale of a 66 percent stake in gas grid operator DESFA, a project that has also been labeled a milestone in the second bailout review.

The Wall Street Journal on Wednesday published the contents of a European Stability Mechanism document on the short-term measures it will propose to reduce the Greek debt by 21.8 percent of gross domestic product up to 2060.

These include maturity extensions to 32.5 years, European Financial Stability Facility bond swaps with new ones of a fixed rate and fresh funding with a fixed rate. The ESM confirmed that the report was accurate but the proposals have not yet received the approval of the eurozone finance ministries.